What This Notice Means
The CP321K goes to taxpayers who may have lost funds from a TreasuryDirect account to theft. It tells you that you may be able to claim a theft loss on your return.
TreasuryDirect has told the IRS it has recovered all the funds it can. That matters, because you can claim a theft loss once you've recovered as much as you can.
What to Do
- Report the interest. Report the interest income from the TreasuryDirect Form 1099-INT on your 2025 return. This applies even if your theft loss belongs on a later year's return.
- Claim the loss on Form 4684, Section B (income-producing property), for the year you received a partial recovery or were told nothing could be recovered.
The IRS gives these instructions for Part I of Section B:
- Line 20, adjusted basis: your original investment plus the amount reported on the Form 1099-INT.
- Line 21: any funds recovered, reported as "other reimbursement."
- Line 23, value before the theft: the total redemption amount of the securities.
- Line 24, value after the theft: $0.
In Part II, enter the loss in column (b)(ii) and report the final calculated loss on the indicated line of Schedule A, Itemized Deductions.
Which Year?
If you got a partial recovery in 2025, or were told in 2025 that nothing could be recovered, claim the loss on your 2025 return. If either happened in 2026, claim it on your 2026 return. Either way, the 1099-INT interest still goes on 2025.
If you already filed for the year the loss belongs in, consider an amended return. E-filing is the fastest way to amend.
Protect Yourself Going Forward
Log into TreasuryDirect to see how much was recovered. Consider getting an Identity Protection PIN (IP PIN) from the IRS to help stop someone from filing a fraudulent return with your SSN.
If you received a CP321K and want help claiming the loss correctly, call us at (813) 229-7100.